GM’s Board of Bystanders just voted to allow its top execs to resume trading their company’s shares. GM’s big dogs have until May 21 to buy, sell, or buy and then sell their company-subsidized stock. According to Bloomberg News, it’s “another sign of confidence at GM.” Viewed another way, it’s a sign of impending doom. This fall, after GM fails to wrest any significant concessions from the United Auto Workers (UAW), after the full extent of GM’s cash conflagration becomes apparent to the Street, bankruptcy will once again loom large and GM stock will tank.

Looking at General Motors’ inflated stock price, I reckon Wallace Hartley’s band could have taken a few anti-anxiety tips from GM’s spinmeisters. GM’s PR machine has successfully focused the minds of both the press and the investment community on cost cutting, union buyouts, new products, theoretical new products, Chinese Buicks, carbon cap groups, anything and everything save the only thing that really matters: cash.

In its last quarterly statement, GM reported that it has $24.7b in the hopper. It’s generally accepted that the automaker needs $10b to keep the lights on (i.e. pay suppliers). So General Motors is $14.7b away from filing for Chapter 11 protection. Of course, that’s the best (worst?) case scenario; if General Motors has any sense, they’ll declare bankruptcy before hitting the wall and save some much-needed cash for restructuring. Anyway, they’re headed in that direction.

Last quarter, GM reported that it had immolated $1.7b of its cash hoard. All things being equal (i.e. no turnaround), the company’s coffers will be lightened by $6.8b this year. If GM’s cash burn continues at that rate, the company has a little over two years before bumping-up against the 10 bil barrier.

But all things are not equal– even without supposing GM’s turnaround turns into a nose dive. For one thing, the first quarter’s results are not the harbinger of things to come.

Last quarter, GM’s accounts payable rose by roughly a billion dollars. It’s entirely possible that the extra bil represents the current state of pay and belongs on the cash burn side of the ledger. If so, that would raise the [artist formerly known as the world’s largest] automaker’s quarterly cash burn to $2.7b per quarter. At that pace, General Motors could only evade bankruptcy for another year and four months.

At the same time, GM’s also declared that it will spend between $8b and $9.5b on capital expenditure (i.e. developing new products) this year. In the first financial quarter, GM spent just $1.2b of that total– some $800m to $1.17b less than one quarter of the total amount of their planned “cap ex.” If they spread the rest of the expense evenly over the last three quarters, that’s an additional $277m to $392m heaped onto GM's quarterly cash burn.

There’s one reason and one reason only why GM’s feeling the burn: the North American market. This quarter, GM North America (GMNA) posted an adjusted loss of $85m. This after selling the family jewels, cutting structural costs to the bone, trimming production and, most importantly, introducing a raft of new products. If GMNA’s not making a profit now with their new metal glittering in the marketplace, how will they do so in the short to long-term future?

There’s only one answer to that vexing conundrum: drastically cut the UAW’s wages, health care and pension costs. As we’ve said before, there’s not a hope in Hell that’s going to happen. For one thing, unions are in the business of increasing wages and benefits. For another, CEO Rick Wagoner’s $10.2m smash and grab compensation package has destroyed management’s bargaining position. But most critically, GM is profitable.

Although GM’s European operations are flat, GM Asia Pacific (GMAP) is on fire. Low-cost (non-union) labor and hot products have increased the unit’s sales by 20 percent, boosting revenue by 35 percent to $4.6b. GM Latin America, Africa and Middle East (GMLAAM) is also cranking. First quarter net income tripled to $201 million in the first quarter of 2007. Russia, India, China– the rest of the world is GM’s oyster.

This international dichotomy plays straight into the union’s hands. As long as GM’s foreign relations are banking bucks, their American and Canadian unions are happy to tough it out, take Johnny Foreigner’s money and keep on keeping on. If GM somehow turns its North America operations around, great! If not, so what? Let it limp.

Which brings us to the end game.

GM’s foreign operations can’t grow quickly enough to damp down the flames of GMNA’s cash burn. And even if they did, GM’s Board of Bystanders would eventually recognize that GMNA is a bottomless pit. GM’s foreign ops will need every dollar they make to compete against cash rich Toyota. One way or another, GMNA’s going down. GM execs are banking on it right now. 

Nominations for our Ten Best Automobiles  for 2007 proceed apace. So far, you’ve nominated 96 different [sold as] new vehicles, from the A3 to the Z4. We thought you might appreciate some fresh cyberspace in which to nominate, elucidate and participate in this automotive love-fest. Nominations are open until midnight (EST) this Friday; feel free to forward any further contenders or add your comments up until the deadline. Our writers will then select twenty finalists so you can choose the Ten Best. Meanwhile, here are some highlights from your nominations for the best of the best.   

In nominating the Ford Crown Victoria, Ingvar stated, “I am not American, and I haven’t been to the USA. But if I went there, I would buy one just to feel as American as possible. This and the Town Car should be put up in the MOMA or the Smithsonian as examples of true heroes of American industrialism.”

Matthew Sullivan explained how the Mitsubishi Lancer Evolution earned his respect. “At first, I had no idea what I was getting… [Then] I got seat time in some of the greats in all prices ranges: Vette, Viper, M3, M5 (the new one), Boxster, S4, Mini Cooper JCW, Miata, Golf GTI, Civic Si, Euro Focus ST, etc… Eventually I came to realize that the Evo was my ‘price is no object’ car.”

There were plenty of paeans to more prosaic machines. Steven Lang nominated the Toyota Corolla. “I know this is a shocker from a sports car enthusiast. However I have to tip my hat to a model that represents the pinnacle of reliability, fuel efficiency, design efficiency, and just plain common sense. As a commuting device the Corolla simply makes more sense than any other compact car.”

As this part of the process does depend on the weight of numbers, I haven’t totaled up the number of nominations for each car (if someone wants to…). It seems fairly clear that the Mazda MX-5 and Jeep Wrangler are well-loved and respected favorites.

Steve Green spoke for many when he praised this most quintessential of American off-roaders: “A great vehicle is neither more nor less than exactly what it needs to be. By that measure, the new Jeep Wrangler is a damn good vehicle. The new Wrangler distills 60 years of tradition into unheard-of off-road skills, and better on-road manners than anyone could reasonably expect.”

HawaiiJim was positively poetic in his ardor for the Subaru Forester.

Not too wide and not too tall,
Its versatility stuns us all.
All-wheel drive for a stormy day,
Easy loading is its way.
Entry needs no leaps or bends
Through curvy roads it easily wends.
Gorgeous, No, babe-magnet, Not…
But super visibility makes it hot.
Common sense makes one thing clear
I nominate Forester with no fear!

Several commentators wanted to know why readers were nominating cars they had never driven, owned or otherwise personally experienced. As Virgil said, they can because they think they can. And they’re right. There are a lot of good reasons for nominating a car for a the Ten Best: looks, sound, specifications, technological prowess, pedigree, reputation, etc. Besides, in these YouTubular times, personal experience comes in many forms. 

Ryan remarked: “When all these nominations are rounded up, it’d be interesting to see how many cars were nominated for both Ten Best and Ten Worst.” So I dug out the list of Ten Worst Automobiles nominees and had a look. They are the best of cars; they are the worst of cars.

Acura TL
Audi A3
BMW Z4
Chevy Impala
Chrysler 300C/SRT8
Ford Crown Victoria
Ford F150
Ford  Mustang
Honda Accord
Honda Civic
Honda Fit
Hyundai Tiburon
Jeep Wrangler
Land Rover Range Rover
Lincoln  Town Car
Mazda RX-8
MINI Cooper
Mitsubishi Lancer GS
Pontiac Solstice/GPX
Porsche Cayenne Turbo
Saturn Sky/Red Line
Scion xB
Toyota Camry
Toyota Corolla
Toyota Prius
VW Jetta GLI
VW Rabbit

This bi-polar poll demonstrates our readers’ catholic (small c) tastes. Which brings us to ole’s observation: “Do you guys even know how great this is, that 122 people have commented and stayed on topic, and haven’t abused each other for their opinions? How cool and [unfortunately] rare.”

Even though the delete button did see some service, I echo that sentiment. TTAC has the best group of readers in cyberland. While the comments on many other automotive websites often degenerate into flame wars and sophomoric name-calling, we can count on you, our faithful, literate readers to provide well-informed and thought-provoking insights, no matter what the subject.

Thanks to all of you for your part in making TTAC a safe haven for dangerous thinking. I look forward to revealing the 20 finalists and your 10 winners. Oh, and look out for a major surprise in the next day or so. We’re taking this bad boy to the next level. Our treat.

In the late ‘90s, a popular consumer magazine claimed a certain SUV rolled over easily. This study was strongly debated; I doubt anyone remembers who was right. But the damage was done. The vehicle fell out of favor into the one-way pit of corporate neglect. As the dust settled, I purchased a used example of this otherwise reliable, well-built machine at an exceptionally low price. After five virtually trouble-free years, I’ve decided to replace my ‘98 Isuzu Trooper with something newer. And so begins my hunt for undervalued quality.

The contrarian investor buys stocks that are cheap and currently out of favor. He seeks shares whose price has been depressed by bad news or a temporary setback, which otherwise represent sound investments. These principles apply perfectly to the art of buying a used car. For those willing to venture outside of the Honda-Toyota mix of political correctness, amazing values await.

A contrarian buys quality. These days even so-called second-rate automobiles may possess excellent quality. If you can stomach the fact that your car is not quite the class leader (whatever that is) and resist the social pressures to “buy the best” (whatever that is), you can save an enormous amount of money on a used car, and not lose much of it later.

After considerable contemplation, I’ve concluded that the sweet spot for American automotive value is currently $16k. For sixteen Grover Clevelands, you can purchase a wide variety of gently used 2006 models, still under warranty and mechanically fresh. While we’re not talking about budget boxes here, it is true that 16 large won’t buy you a lot of what I call automotive fluff: leather and fancy electronics. Pay less and you’re looking at too much compromise (tinny doors are endlessly annoying).

Sixteen thousand it is. So what’s out there for contrarian car buyers?

Let’s start by eliminating the obvious. Hondas and Toyotas are immediately disqualified. We’re looking for a vehicle that’s suffered the slings and arrows of outrageous depreciation. Toyondas just plain don’t. Again, we also want quality, so Volkswagen drops entirely from our list. Unfair? Possibly, but both J.D. Power’s mob and anecdotal evidence suggest that VW quality’s leaves everything to be desired. And out goes VeeDubs’s familial relation, Audi.

In this pursuit, domestics rule. FoMoCo has plenty to offer the curious contrarian. A quick internet search unearths a fleet of sub-$16k 2006 Ford Fusions, a textbook casualty of the Detroit resale curse. The Fusion score high marks for drivability and reliability, yet sells for the same price as an econobox on the used market. As do the Five Hundred/Freestyle, which should take an even bigger hit when Ford re-renames them the Taurus/Taurus X.

In fact, just about any Ford product holstering the Duratec 3.0-liter engine qualifies as a suitable candidate. Mazdas equipped with ye olde six, the MPV and Mazda6 S wagon (not the sedan or the hatch), are decent, second-tier cars that sell for peanuts on the used car market. Pistonheads note: the Mazda6 S is a particularly attractive (i.e. unloved) stealth wagon.

One can’t talk about cheap— I mean, undervalued cars– without taking a good hard look at Chrysler cast-offs. Amateur CSI’s will find plenty of dried contrarian drool on used Town and Country minivans  with three to ten thousands miles, selling for the magic one six.

The Magnum, Dodge’s chop top load lugger, rocks; or, I should say, sinks like a rock. With a little digging, you can find a well-loved 2006 Magnum SXT that listed for $26K selling for $16K.

Chrysler’s proto-CUV, the Pacifica, can also slip into our price range. And while the anti-green hedonist inside me craves a stripped 2006 Grand Cherokee or Commander, they fall just north of our self-imposed budget. Damn.

For the ultimate target-rich environment, type Saturn in the Search box. You can buy a used Ion for about the same price as a good washer and dryer set. I am especially impressed with the Ion Red Line— an imperfect sports car for sure, but redeemable at the right price.

And for the really daring contrarian, take a look at the crop of domestic minivans on their final death march. The Ford Freestar and Chevy Uplander may be hideous, but the discrepancy between msrp and what’s it gonna cost me is staggering.

The old adage says that a fool and his money are soon parted. If only it were that simple. A proud Camcord buyer easily pays $21k or more for a brand new model, replacing it every few years.

But the contrarian, with the clarity of an economist, pays $16k for a gently used Fusion or the like with a similar feature set. And then banks a $5,000 buffer to cover any (real or perceived) differences in reliability. Just who is the fool now?

Current Corporate Average Fuel Economy (CAFE) standards dictate that U.S. automobile manufacturers must produce vehicles whose overall average achieves 27.5 mpg (for cars) and/or 22.2 mpg (for trucks). The regulation’s stated goal: “encourage” manufacturers to build more fuel-efficient vehicles and, therefore, somehow, eventually, “lead” American consumers into buying same. Yeah right.

Generally speaking, people don’t buy what’s good for them. Whether it's cigarettes or SUV’s, people buy the products they want and then rationalize their purchases afterwards (if they can be bothered). CAFE’s underlying principle– forcing manufacturers to build products people don’t want– is a very special kind of lunacy, normally reserved for “planned economies.” And it’s about as effective as it sounds.

By the same token, trying to force consumers to buy something they don’t want (for their own and the planet’s good, for example) instead of something they do want (even though some supposedly smarter person says they shouldn’t) is about as sensible as herding cats. Social pressures and “education” will only take you so far, and no further.

In practice, CAFE regs are even worse than they are in theory. Raising mpg average numbers seems noble enough– until you devil into the details. Even a brief examination shows that the manufacturers have used their political clout to rig the system.

The end result: Honda, Toyota, Nissan, etc. have all figured out how to create fuel-efficient cars that people willingly buy and drive, while the Big 2.5 ain’t got game. The CAFE regs failed to force them to do so.

Gasoline prices, however, have focused Detroit’s mind wonderfully. Thanks to pump price escalation, Detroit must now listen to the U.S. automotive market and build what it demands– or go belly-up. Again, this new reality has nothing to do with previous, existing or future CAFE legislation.

In fact, let’s imagine a CAFE-free world. With gas heading up past three bucks a gallon, it’s easy to suppose that a large number of people would voluntarily choose to abandon their luxobarges in favor of a more frugal set of wheels.

While those who can afford five dollar a gallon gas and/or depend on driving a HD truck or SUV for their livelihood would stay with their big rigs, the rest of us would transfer to rides that conserve our cash.

But what if gas prices crash? There’s an accepted legislative methodology for discouraging the consumption of products judged injurious to society: sin taxes.

Hiking up the cost of alcohol, cigarettes, gas guzzlers, etc. through taxation [supposedly] prices consumers out of the forbidden fruit market. Considering the power of addiction, it’s a policy that tends to be more revenue than results positive. But it’s about as good as it gets.

If we want to curtail sales of gas guzzlers, we should immediately abandon all federal regulations concerning fuel economy and slap on a big old federal gas tax. That, however, would hit everyone – rich and poor alike – in their wallets. The only thing politicians hate more than missing an opportunity to regulate something is getting caught with their hands in your wallet.

Instead of focusing on nit-picking laws and regulations, what about actually solving the environmental and national security problem inherent in our gas-powered society by switching to alternative fuels? You know, launch some sort of Manhattan project that changes our automotive infrastructure from oil-based fuel to corn or sawgrass 'shine?

As this website has argued before, federal alt fuel initiatives are proof positive that you can create more pollution and political turmoil and greenhouses gasses by trying NOT to use gas than you can by using it. Government interference in the E85 industry– from CAFE credits for vehicles that will never touch a drop of corn juice to federal corn subsidies– are nothing more than lipstick on a pork barrel.

While I dream of hydrogen-powered cars, I don’t want my tax dollars poured into national hydrogen research, production and distribution. If you thought the reconstruction of Iraq was riddled with corruption, can you imagine the billions that a hydrogen-power project would waste? And for what? To shift national energy consumption from pump to plant?

The free market is the answer. If E85, plug-in hybrids or hydrogen fuel cell cars pay, they play. If manufacturers want to build jumbo SUV’s in times of high fuel prices, they’ll increase SUV fuel efficiency. If they can’t, American consumers will migrate to more efficient vehicles all on their own. If not, a tax at the tap will jolly them along. If there’s no political will for that solution, so be it. Last time I looked, it wasn’t the government’s job to impose its will on the people.

In short, there’s no need to set some arbitrary limit on the fuel economy of new vehicles. It’s time for CAFE to go.

On Friday, Senator Carl Levin condemned a draft Commerce Committee bill revising federal Corporate Average Fuel Economy (CAFE) standards. The bill would raise the required average to 28.5 mpg by 2015 and 35 mpg by 2020, with four percent annual increases thereafter. The Michigan Democrat threatened to filibuster the bill. In fact, Levin should shut the Hell up. If passed as is, the Commerce bill would create The Mother of All Loopholes. 

Part of the proposed Commerce bill directs the National Highway Safety Traffic Administration (NHTSA) to change passenger car fleet averages to a system based on a given vehicle’s “footprint” (wheelbase times width divided by 144).

To understand the implications of this change, consider the impact of the same “reformed system” on light truck CAFE standards, which take effect this year (albeit on an opt-in basis until 2010).

Light truck footprint-based fuel economy standards are based on a sliding scale. Simply put, smaller vehicles must be significantly more frugal than big ones, and every light truck within that spectrum must meet a size-specific mpg target.

But there is no requirement to create a mix of vehicles whose combined fuel economy adheres to a federally mandated overall average. In other words, according to the new rules, the sliding scale IS the Corporate Average Fuel Economy standard, NOT a manufacturer's fleet-wide light truck average.

The change has freed light truck manufacturers from any obligation to build a “mixed fleet” of vehicles that meet an overall fuel economy average. I repeat: Ford, GM, Dodge, Toyota, etc. can build any size truck they like as long as it meets its size-specific fuel efficiency target. 

If cars switch to this same system, they’ll be subject to a similar curve as their light truck counterparts: small cars will have to meet much higher fuel efficiency standards than mid and large-sized cars. And domestic manufacturers will be under no obligation to build a mix of vehicles that achieves an overall average. As long as any given passenger car meets the appropriate size-related standard, they’re good to go. 

The United Auto Workers (UAW) appreciates the enormous implications of this rule change. The UAW’s legislative director told the House Commerce committee that his employer vehemently opposes changing passenger car CAFE requirements to a footprint calculation. lan Reuther said the move would lead The Big 2.5 to completely abandon the small car market to foreign manufacturers (eliminating union jobs in the process). 

True dat. It’s an open secret that Detroit only makes econoboxes to meet CAFE standards. They’re a “loss leader” that allows them to sell large, large-profit vehicles. Without a federal obligation to build uncompetitive, unprofitable small cars, Detroit would cut bait and fish.

And if you thought that higher CAFE standards would lead to more people buying smaller cars, think again. In fact, basing standards on vehicle footprints could lead consumers in the opposite direction.

In a document outlining the impact of “reformed” standards on light trucks, the Department of Transportation noted “Downsizing of vehicles is discouraged under Reformed CAFE since as vehicles become smaller, the applicable fuel economy target becomes more stringent.”

If that doesn’t make the new bill on federal fuel economy standards all Detroit’s Christmases rolled into one, the new proposed CAFE legislation also includes a "get out jail free" card: NHTSA can lower fuel economy mandates if the agency determines they’re not “cost effective” or “feasible” in a given model year.

It’s a mostly forgotten fact that Congress has already charged NHTSA with setting CAFE standards. They’re supposed to do so at the “maximum feasible level” according to “economic practicability, technological feasibility, the effect of other standards on fuel economy and the need of [sic] the nation to conserve energy.”

Obviously, Congress has usurped NHTSA’s authority. Worse, the new proviso or “off ramp” turns NHTSA’s theoretical CAFE evaluations into an all-too-real politically-charged adjudication.

When an automaker or group of automakers ask the agency for a CAFE wavier based on poverty or technical challenges, how would NHTSA make its decision? Does Congress seriously expect NHTSA to examine an automaker’s books or R&D labs to determine whether to waive CAFE compliance?

But wait there’s more! Under the proposed legislation, Detroit automakers would be able to use CAFE credits to meet fuel economy mandates for five years (two more than currently). AND they’d be able to buy and sell credits amongst fellow manufacturers.

I’m having trouble getting my head ‘round all this. Unless the Senate strips off all these little goodies, Detroit’s bitching about a federal bill that will nearasdammit remove their unprofitable CAFE commitments.

Perhaps they’re getting the media to focus on illusory CAFE numbers so they won’t consider the fine print that renders them largely meaningless. Is Detroit really that devious? If they are, how did they get themselves into this mess in the first place?

"We have a continued sense of high urgency." Last Sunday, I ressurrected auto industry analyst Mary Ann Keller’s 2005 call to GM to face its problems with “a sense of urgency.” Yesterday, GM’s CFO reassured analysts and reporters by seeing Keller’s heightened mental state and raising it a Mel Brooks. High urgency? What the bleep is that? Whatever it is, it better be the management equivalent of Viagra.

"Our business is not generating the kind of returns we expect,” Fritz Henderson told the money men and journalistic jackals, announcing a 90 percent drop in GM’s first quarter earnings (from $602m to $62m). Ya think?

At the risk of overthinking this, I find it a bit strange that Fritz said GM’s not getting the returns they “expect” not “expected.” I take that to mean there’s an ongoing discrepancy between management expectations and market reality, in a “what the Hell do we do now?” kinda way.

Just in case we hadn’t quite grokked the overarching irony of GM’s circumstances, while Fritz was busy yap dancing, Car Czar Bob Lutz told a hack that GM’s on-again, off-again, on-again, off-again Zeta platform cars are on again. Maybe. Meanwhile, GM's [theoretical] world-beating small car is still stuck in global limbo.

Despite ongoing product confusion, results from GM's overseas operations (net income up $264m to $304m) indicate that it would be relatively smooth sailing for the corporate mothership if it weren’t for the gaping hole in its side known as the North American automotive unit (GMNA).

Although GMNA's first-quarter net losses narrowed from $292m to $46m, Fritz [rightly] credited structural cost savings. In other words, we’re cutting our way to prosperity! Only, you know, not. But hey! GMNA's revenue per vehicle (RPV) rose by $1,064!

Yes well, in a perfect world, an uptick in small car sales would have lowered the number. While GM is selling larger, more highly contented vehicles, they're flogging fewer of them (sales down 9.5 percent in April, 100k fewer vehicles sold during the quarter). And the revenue figure doesn’t include the cost of the additional content. In fact, the actual cost per vehicle could well be rising faster than the RPV.

Addressing the subject of sinking sales, Fritz flagged the fact that GM’s rental fleet cutback accounted for 60 percent of the automaker's reduced throughput. U.S. retail sales were “only” down four percent. Yes but– sales of the vehicle carrying the hopes of a nation the company– the refreshed Chevrolet Silverado pickup– tumbled 7.2 percent.

And things are about to get even trickier. GM’s urgently high— I mean “highly urgent” CFO acknowledged the United Auto Workers (UAW)-shaped storm clouds gathering on the increasingly bleak horizon. Fritz played the “we’re all in this together” card.

“We have to continue to make significant improvements,” Henderson admitted, continuing the automaker’s unspoken policy of not speaking about long- or short-term targets. “That is on our minds as we go into collective bargaining, as well."

As predicted, GM’s almost about to gonna sort its union problems at its Lordstown and Fairfax factories. This proto-success returns the Delphi UAW UXB (unexploded bomb) to its rightful position under the Chairman’s chair.

To prepare for a UAW payoff at their bankrupt former subsidiary and mission-critical parts supplier, GM's allocated an additional $100m (up to $500m) for the first year of any Delphi deal. They've also increased the ongoing estimated cost of a Delphinian solution by an additional $100m per year (now $100m – $200m per year). And they still insist they're going to save $2b on parts costs over the next five years. (Someone should tell Delphi's private equity owners.) 

Short term, the Delphi problem pales in comparison to the ongoing disaster over at their GMAC finance unit. Thanks to sub-prime loan implosion, their former cash cow has turned into a vampire bat.

This quarter, GM’s 49 percent share "earned" it a $115m loss. (GMAC dividend RIP.) Fritz took a stab at singing the sun will come out tomorrow, but his heart wasn’t in it. ”When you're in the midst of the kind of maelstrom we're in with nonprime, I think it's important to take it quarter by quarter.” And take it like a man.

Bottom line: with its continuing cash conflagration, GM needs to start selling a whole bunch of profitable vehicles in North America, and soon. Goldman Sachs analyst Robert Barry isn’t optimistic. He told Automotive News that GM’s NorAm results were weak "given that we are at the peak of GM's product cadence."

Barry may not know the half of it. According to TTAC’s Deep Throat, as bad as GM is doing overall, it’s far worse on the coasts. In particular, California is becoming more and more of a GM-free zone. That situation needs sorting now, in a super highly urgent way.

But how? As long as Toyota is the price leader and GM has to discount its vehicles to sell, GMNA can only hope for breakeven or slightly better. And face much, much worse.

In the Phantom Menace, Anakin Skywalker stands in front of the Jedi Council. Master Yoda senses that Skywalker’s fear of losing his mother is clouding his mind. “Fear is the path to the dark side,” Yoda pronounces. “Fear leads to anger. Anger leads to hate. Hate leads to suffering.” And there you have it: the story of the merger between Daimler-Benz and the Chrysler Corporation. Witnessing much suffering, we are.

Like Anakin, every Daimler-Benz CEO has been afraid of losing his metaphorical mother. In other words, they’ve been scared that Daimler-Benz will fall prey to a hostile takeover. In 1984, Daimler-Benz CFO (and later CEO) Edzard Reuter decided that the only way to keep Daimler-Benz independent was to grow to the point of indigestibility.

At the time, Daimler-Benz had huge cash reserves. They could have easily survived a complete failure of one or two new model lines. But Reuter believed that the market for Daimler-Benz products wasn’t big enough to accommodate poison pill-scale growth. So he decided to diversify.

Reuter mined Daimler-Benz’ cash mountain to buy numerous aerospace and technology corporations. Unfortunately, his acquisitions were bottomless pits. Reuter burned so much cash during his regency that Daimler-Benz’ 1995 stock price had fallen 12 percent since the fateful day he’d assumed control in 1987– despite a wildly successful Mercedes brand.

In 1995, Reuter floated away on his golden parachute, creating corporate lebensraum for his successor, Jürgen Schrempp.

Schrempp soon sold every major business that wasn’t part of traditional automaking. When he finished de-acquisitioning, Daimler-Benz was exactly where it was ten years earlier, only poorer.

By this time, the global car industry was in the throes of massive consolidation. BMW, GM and Ford were buying-up once storied marques. FIAT was on the ropes. Toyota’s epic growth was continuing. Industry analysts were predicting that the international automotive market could only sustain five independent car manufacturers by 2005.

And then Deutsche Bank, Daimler-Benz’ long-time majority shareholder, announced it was dumping its stake in the German automaker. If Yoda would have been present, he could easily have sensed the fear within Schrempp.

Schrempp decided that Daimler-Benz had act upon of the old Italian saying: il pesce grande mangia il più piccolo. Daimler-Benz had to eat someone else not to get eaten.

Honda topped the list. Still smarting from its ill-fated tie-up with Britain’s Rover Group, the Japanese automaker was deaf to Schrempp’s overtures. So Schrempp started negotiations with/for Chrysler.

At the same time, Ford approached Daimler-Benz about a possible tie-up. When the Ford family made it clear that a takeover (Ford over Daimler-Benz) was the only acceptable scenario, Schrempp pulled the plug on the negotiations. After all, Chrysler had announced “game on.”

Daimler-Benz paid $36b for the American automaker, called it a merger of equals (a.k.a. “a wedding in heaven”) and breathed a sigh of relief. They singularly failed to notice a disturbance in the force.

One year later, on March 10, 1999, it all started to go downhill. That was the day DCX’ Board of Directors rejected DaimlerChrysler’s plan to take over the world Nissan. Schrempp wanted it. Nissan wanted it. But Schrempp was too afraid unable to push his plans through the Jedi Council DCX’ Board of Directors. 

Renault ended up buying Nissan. Under the leadership of Carlos “The Slasher” Ghosn, the two companies formed the most successful merger in recent automotive history. Schrempp was left shaking his head, knowing that Nissan could have provided Chrysler with the high quality small cars it needed for the U.S. market (a task now left to DaimlerChrysler’s less-practiced Chinese partners).

Still hungry for a Japanese partner, DaimlerChrysler bought Mitsubishi, a wounded manufacturer with plenty of production problems. This decision lead to the second important date in the history of DaimlerChrysler’s failure: April 22, 2004.

On this fateful day, Daimler-Chrysler’s Board of Directors decided to end any further financial help for its ailing Mitsubishi brand. Schrempp had staked his reputation on making Mitsubishi work. It needed a massive cash infusion. But the force was weak with that one.

After the Board’s rejection of his request, Schrempp’s days were numbered. By the end of 2005, he finally stepped down, taking with him the grand global “vision” that was supposed to fuel the Daimler Chrysler merger.

By the time this epic episode faded to black, DaimlerChrysler’s stock price stood at sub-‘95, (pre-Schrempp) levels. Now it’s Dieter Zetsche’s turn to clean up the mess that Schrempp left behind. And when he’s finished, Daimler-Benz will be where it was 10 years ago, only poorer.

According to the official numbers, CEO Reuter and Schrempp’s delusions of grandeur successful attempts to prevent a Daimler-Benz takeover burned through some $60b of Daimler-Benz’ money, although the unofficial estimate place the amount as high as $120b. And it ain’t over yet.

Let’s just hope Dr Z is not afraid.

The hybrid hype has finally reached Detroit. This fall, the gi-normous GMT900-based GMC Yukon (a.k.a. the Chevrolet Tahoe) will offer optional dual-mode hybrid engine technology. Next year, Chrysler will follow suit with a hybrid Durango/Aspen. Both automakers promise 25 percent better mileage on the highway. Chrysler is claiming a 40 percent increase in the city. GM promises a 25 percent urban gain. Happy days are here again! You’ll soon be able to have your SUV and afford to drive it too! And cool the planet! Or, you know, not.

While the idea of a full-size hybrid SUV may send California’s Governator into a muscle flexing frenzy, one doesn’t have to read too carefully between the lines to see the abject futility of this venture. Let’s crunch a few numbers.

According to our friends over at the Environmental Protection Agency (EPA), the Yukon/Tahoe twins burn gas at the non-PC pace of one gallon every 16 miles in town, and once every 21 miles on the open road. Chrysler’s most efficient V8 uses gas at a buttock-clenching 14/19 mpg. 

To fix this sales sucking situation, GMC and Chrysler have equipped their big rigs with Prius-like (though proprietary) dual-mode hybrid technology. At low speeds and light loads, the hi-tech SUV’s can move forwards (or backwards) via electric power, internal combstion or some combination thereof. At high speeds or heavy loads (i.e. drag racing with a bass boat behind), the hybrid's batteries assist the engine. Add regenerative brakes and displacement-on-demand cylinder deactivation and away you go.

Surely all this ground-breaking technology will provide significant efficiency improvements and fuel cost savings. I don’t know about you but I’m thinking, what, mid to high 20’s? That kind of improvement might even give the SUV genre a new lease (five year loan?) on life. No sir.

For those of you who haven't done the math yet, the hybridified GM and DCX SUV’s are set to eke out a paltry 19-20mpg. And that’s city driving, where hybrids typically shine.

The enemy, of course, is weight. Just as you can’t make a silk purse out of a sow’s ear, you can’t turn a gas hog into silk pajamas (or something like that). Although GM is retrofitting the hybrid Yukahoe with aluminum components to compensate for 300 lbs. of batteries, it’s more or less a wash. The SUV’s will still weigh in at nearasdammit 5000 lbs. (or more depending on drivetrain).

Bottom line: a 25 percent improvement on not much ain’t a whole lot. But it is something, right?

“We have to think hard about the consumer who buys vehicles like the Dodge Durango and the Chrysler Aspen,” prevaricates Mark Chernoby, who’s just one letter away from having the world’s worst name for a VP of Advanced Vehicle Engineering. “These are people who want to have hauling capability.”

OK, but how many people who really need 8900 lbs. of towing capacity are gonna fork out a bunch more money for a vehicle offering few more mpg’s– especially when there's a lot full of heavily discounted non-hybrids lazing around?

Yes, here we go again: the “hybrid premium.” Forking out a couple of thousand bucks extra for hybrid tech has got to be pretty low on your average SUV buyer’s “to do” list. Buyers who previously owned full-sized SUV’s as status symbols (and got religion down at their local pump ‘n pay) have either left the genre already or can’t wait to do so. And any Chevy, GMC, Dodge or Chrysler dealer who thinks he’s going to see Prius drivers wheeling into his lot to trade-up to a hybrid SUV is plumb crazy.

It’s no surprise that the domestic automaker’s first serious hybrid offerings have arrived in SUV form. SUV’s are cheap to build, the factories and suppliers are already in place and they’re the automakers’ highest profit product. Besides, genuine clean sheet designs are extremely expensive and risky propositions. Better to stick with what you know. 

But American consumers will quickly see that boosting SUV gas mileage by 25 percent is nothing more than porcine lipstick application. If gas prices crest four bucks a gallon this summer, this insight will only require of femtosecond of consumer decision making. The odds that gas prices will trend downwards enough to lure large numbers of SUV buyers by the fall, when GMC unleashes their hybrids, are smaller than the Honda Fits, Nissan Versas, Toyota Yari and Chevrolet Aveos many of SUV refugees are now driving (no, really).

By the same token, Chrysler will enjoy the privilege of watching GMC fail to sell their hybrid Yukahoes before they open the gates on gas – electric Aspangos. Perhaps DCX (or whomever) will learn by example and not spend precious advertising and marketing resources on this ill-advised makeover. Maybe they’ll build a hybrid-powered 300C instead, to help revive that line’s flagging sales. Who knows? Maybe gas pigs can fly.

When it comes to full size pickups, three words have dominated headlines over the last six months: Toyota, Toyota, Toyota. Can the Tundra penetrate the Big 2.5’s final sanctuary? Who will crumble first, GM or Ford? It’s made in Texas! Yada, yada. But Toyota’s not the only American-made foreign brand playing in the full-size pickup truck sandbox. Nissan was here first and they’re not going away. So can this Mississippi Titan play ball or is it destined to remain a third-string niche player?

After Rick Wagoner “woke up” to the news that Toyota had replaced General Motors as the world’s largest automaker, GM’s CEO fired-off a post-Empire email to his execs. Rabid Rick admonished The General’s generals to stay focused on “further reducing our still huge health care cost disadvantage versus Toyota and other non-U.S. based manufacturers.” So Mr. Wagoner’s major dodos must sell the union on a “huge” health care cutback at the same time that regulatory filings reveal that the boss pulled down $10.2m in fiscal ’06 and just received a $370k increase to his base pay for '07 (regardless of results). Good luck with that.

You might’ve thought the prospect of life or death contract talks with the United Auto Workers (UAW) at both GM and Delphi would have convinced GM’s Board of Bystanders that austerity begins at home. Nope. They rubber stamped a CEO compensation package that makes a mockery of any reasonable concept of performance-related pay and insures the continuation of management – union conflict. If you need proof that it’s [lack of] business as usual at GM, well, there’s more.

In the same email, Wagoner was quick to assure his execs of that his “steady as she goes” management of GM’s decline continues apace. “Our sales and marketing strategy requires patience," Rabid Rick explained. "But it's working, and we need to stick with it.”

Putting aside the fact that only the most optimistic analyst could stretch the definition of the word “working” to cover GM’s ongoing financial losses, cash burn and inexorable market share slide, this forbearance-requiring strategy has taken a few knocks as of late.

We’ve already covered GM’s start – stop – start – stop Zeta platform program. Any hope that GM would carve itself a niche as a provider of large, comfortable, reasonably fuel efficient rear-wheel drive sedans (a.k.a. traditional American cars) is now in the automotive equivalent of cryogenic suspension. More worrying, the much-need refresh of GM’s small car platform is now stalled amidst union strife at their Lordstown factory.

On Friday, GM stopped tooling and other preparations for their Delta update. The move supposedly came after the UAW decided to dig in its heels over changes designed to make Lordstown more like a modern manufacturing facility and less like a feudal fiefdom. According to an unnamed Automotive News source, local negotiations to remove janitorial and truck unloading jobs from union control and limit overtime fell apart when the national union stepped in and said “No.”

For their part, the UAW claims they pulled the plug on the agreement after learning that GM had decided to postpone development of the new Delta vehicles. The dispute has widened to include GM’s Fairfax facility, tipped to produce the new Epsilon 2-based mid-sized Malibu— another vehicle upon which GM’s passenger car hopes depend. Same deal: contract talks suspended, tooling stopped, or vice versa.

Either way, on the face of it, this is old school stuff. In the run-up to national contract talks, GM threatens to take work away from the UAW. The UAW threatens to strike. GM execs blink, pay off the union and call their stock brokers with the glad tidings.

There’s not a shred of doubt in my mind that GM and the UAW will resolve this dispute in the traditional manner– save minor window dressing spun as “Historic Union Givebacks II." If Rabid Rick had the balls to stand up to the UAW or the charm to seduce them, he would have– should have– done it by now.

It’s almost inconceivable; GM’s playing what the British call “silly buggers” with the UAW and critical future vehicles when they’re hemorrhaging market share, depleting their remaining cash hoard and just passed a psychological watershed that set off alarm bells in every nook and cranny of GM’s bloated Byzantine bureaucracy. I’m sorry; the Toyota tipping point SHOULD have called GM’s multitude of minions to battle stations, but didn’t.

When will GM’s Management and its Board of Bystanders develop what longtime GM watcher Mary Ann Keller called a “sense of urgency?” In case you’ve forgotten, Ms. Keller sounded the alarm back in November 2005, when Toyota first passed GM in the U.S. market (if you remove fleet sales from the equation). At the time, Keller was convinced GM would act to address its flawed fundamentals because, well, it had to.

One wonders what Ms. Keller made of GM Car Czar Bob Lutz’ reaction to the Toyota coup. When a reporter confronted Maximum Bob with the news that GM's global reign was over, the well-paid and pensioned executive issued a terse response: “So what?”

And then Lutz, Wagoner and the rest of GM’s management went back to work, implementing a turnaround strategy devoid of stated targets or a deadline for a return to profit. If the definition of insanity is doing the same thing over and over again expecting a different result, then that's just plain nuts. 

In 1996, the Toyota Camry was about to become America’s best-selling car. To protect the Taurus’ five year reign, Ford ramped up sales to Hertz Rental Car. The strategy worked– for a year. Despite the catastrophic effect on the Taurus’ resale value and image, despite selling off Hertz, Ford still relies on fleets to maintain economies of scale. As do the rest of The Big 2.5, who use fleet sales to mop up extra production, earn new money for old rope and blow out their sales stats. While Detroit knows fleet sales are slow motion suicide, their moves to curtail the practice are not as convincing as they could– or should– be.

That’s because the fleet market’s a double-edged sword. Again, fleet sales keep factories humming– plants whose restrictive union contracts make running them less expensive than not running them. Fleet sales also enhance cash flow and prop up quarterly numbers. On the other hand, selling hundreds of thousands of cars at or below cost throws retail residuals off a cliff, destroys the perceived value of a product and gives a false impression of how well both car and company are doing. 

Over the last few years, The Big 2.5 have all admitted the truth of that equation. They’ve publicly declared their intention to wean themselves off the “easy money.” GM claims they’ve trimmed their fleets sales over the last two years, walking it down by 11.2 percent. Although Ford and DaimlerChrysler have also promised to follow the same path, they haven’t. In that same two-year window, Ford’s rental sales have increased 12.3 percent. DCX’ fleet sales have climbed by a staggering 35.3 percent. And it’s getting worse.

From September 2006 to February 2007, Chrysler (division) offloaded 48.5 percent of its total sales to the fleets, while 32.1 percent of The Dodge Boys’ sales went to the same market. And even though GM overall has cut back on fleet sales, 44.9 percent of Pontiac’s and 29.6 percent of Chevrolet’s total sales ended up in fleets. Ford (the division) off-loaded fully one-third of their total sales to the fleets, with half of that number going to rental companies.

If you deduct fleet sales, Chrysler (division) sold just 147K vehicles over the last six months– which ain’t great but sure beats Pontiac’s 96K retail units. Subtracting fleet action, Chevy’s sales drop to 742K. The math also reveals that Ford (division) placed just 676K vehicles into retail customers’ hands. With this many vehicles still flowing into the fleet market, destined to reemerge at auctions, Chrysler, Pontiac, Chevrolet and Ford will have a tough time convincing retail customers to pay full whack for vehicles facing epic depreciation.

Detroit “gets it” but can’t quite “kick it.” For example, the Pontiac G6 (GM’s fourth best selling car) is now flooding the fleet market. According to Jim Hall, AutoPacific’s VP for industry analysis, GM is trying to replace the Chevrolet Malibu’s fleet sales with the G6. The goal: resuscitate the Malibu’s residual values ahead of the refreshed model’s launch. “You don’t want a brand new model to lose money in resale."

At the same time, Chrysler’s used the fleet market to divest itself of an embarrassment of 2007 Town & Country minivans and Sebrings, and disappear that pesky sales bank that attracted so much media and stockholder attention. But the mid- to long-term effect of Chrysler’s used car tsunami cannot be avoided, either by current Chrysler owners or the corporation itself. 

All that said, The Big 2.5 ARE, however haltingly, cutting back on fleet sales. And the imported and transplanted automakers are taking up the slack. Kia’s fleet sales are up 60 percent over last year (the Optima is proving especially popular with rental agencies). Nissan reports a 45 percent increase in its fleet sales, while Toyota’s contribution to airport rental lots and other fleet repositories is up by 30 percent. 

In case you’re thinking the newbies are headed for a fleet enema to rival The Big 2.5’s, Kia promises to restrict fleets sales to 12 to 15 percent of total ‘07 sales. Nissan won’t allot more than eight percent of its overall sales to fleets, with a maximum of 10 percent of any given model’s sales destined for that end. Toyota says they’ve never sold more than nine percent of total U.S. sales to fleets, and never will.

Flexible factories are the best way to solve The Big 2.5’s production vs. demand dilemma without the cost of shutting down hugely expensive assembly lines. Yet Detroit’s maddening bureaucracy, older plants and less-than-flexible workforce make implementing that approach… problematic. This leaves The Big 2.5 in a bad place: they’re damned if they do, and damned if they don’t. To paraphrase Oscar Wilde, when it comes to fleet sales, Detroit can resist anything except temptation.

“Our goal has never been to sell the most cars in the world.” For those who’ve been following GM’s fall from grace, this statement– following the revelation that GM has ceded its "world’s largest automaker" title to Toyota– probably comes as no surprise. Or maybe it does, because it arrived via Toyota spokesman Paul Nolasco. Or maybe it doesn’t. Toyota achieved this monumental victory by focusing on a process that led to a goal; whereas GM has been all about the money, for quite some time. And therein lies the tale.

You don’t need to compare long and short term business plans to understand the difference between Toyota and General Motors; although if you did, GM’s recent inability to devise a coherent platform strategy or develop a world class economy car would certainly give you pause for thought. All you have to do is sit in a few cars.

You can argue that the relative quality of GM's interior plastics don’t make no never mind. You could say that a four-speed gearbox is plenty of cogs, given their robust engineering, adequate performance and reasonable mileage. You could prevaricate over pushrods or defend GM's value-for-money vis-a-vis the competition. You could conclude that there isn’t any significant, appreciable difference between a current Toyota and an equivalent GM product. Not now. Not anymore. And you’d be wrong.

Don’t take my word for it. In the first three months of this year, Toyota sold 2.348m vehicles. In the same period, GM sold 2.26 million vehicles. All of these buyers had a choice. They chose Toyota over GM because they believed the Toyota product was superior. Yes, “believed.” Even if the “real” difference between a Toyota and a GM product exists entirely in their minds, well, it's still a product-related reality.

Automaking is not the French Revolution. GM can’t simply tell car buyers to forget the past, history starts here. No wait, here. OK, here. Consumers remember their past experiences with an automaker’s products. Just as a carmaker can build a reputation with years of consistent quality and service, bad quality and lousy service can destroy it by the same process, only faster.

Which is just as it should be, and exactly what GM has done. After years of alienating customers with shoddy, non-competitive products and indifferent (or worse) treatment, they’re reaping what they’ve sown. It’s a perfect example of a free market in action, or, if you prefer, simple Darwinism.

Here in the world’s biggest automotive marketplace, GM has provided a textbook example of de-evolution. When I started the GM Death Watch in April ’05, the company had a quiver full of domestic products ready to counter all those lingering bad vibes and “progress” its turnaround.

Including badge engineered products, GM launched the Saturn Sky, Aura and Outlook; Pontiac G5, Torrent and Solstice; Buick Enclave and Lucerne; Chevrolet HHR, Hummer H3 and Cadillac DTS. They updated the Chevrolet Tahoe, Suburban and Silverado; GMC Yukon and Sierra; and Cadillac Escalade.

While some of these models have created a buzz in the U.S. market, none has generated the predicted, mission critical market share uplift, or a return to profitability. How could they? With an estimated 7123 dealers for eight brands selling 42 models, no one model can possibly make up for the dogs, or significantly elevate earnings.

Meanwhile, in the same time period, Toyota has launched two new models: the Yaris and the FJ Cruiser. They’ve updated the Camry, Avalon, Tundra, RAV-4 and Lexus IS, ES, GS and LS. Toyota has less on its plate, and so (arguably) makes it better and (inarguably) keeps it fresher.

Why wouldn’t they? With 2422 dealers for three brands selling 30 models, the company has the development money, marketing budget, healthy dealer network and low cost structure it needs to stay ahead of the pack.

Make no mistake: Toyota knows exactly what it’s doing. It will continue on its current trajectory until GM’s world domination is a distant memory. Not that The General’s destruction is their goal. As company spokesman Nolasco said, "We simply want to be the best in quality. After that, sales will take care of themselves."

The truth is GM has cleared a path for Toyota. GM blurred its once proud brands through botched badge engineering, and then tried to fix the problem by adding brands rather than retrenching. Its fate was sealed. Given that GM’s now wearing two straitjackets– one with a union label and one enshrined in U.S. dealer franchise law– it cannot escape the consequences of its arrogance and short-sightedness. All that’s left is the unraveling.

The Environmental Protection Agency’s current Federal Test Procedure (FTP) for city mileage was originally designed to represent a typical trip on Los Angeles streets. The test– codenamed FTP-72– begins with a cold start from 70 degrees. It then runs for 7.5 miles at an average of 19.6 mph, with a peak speed of 56.7 mph (from a short freeway segment). The EPA Highway Fuel Economy Test (HWFET) starts with a warm engine, runs for 10.26 miles, averages 48.3 mph, and peaks at around 60 mph. Does anyone in the real world drive like that?

Obviously not. By the ‘80’s, the EPA was deluged with complaints that its gas mileage estimates were entirely unrealistic (i.e. hopelessly optimistic). In 1984, the EPA reacted by lowering estimates across the board to “more accurately reflect driving styles and conditions.” The government agency trimmed EPA window sticker stats by 10 percent for the city, 22 percent for highway. This overdue amendment helped consumers feel more confident about calculating their fuel costs (and driving skills).

Thanks in part to the huge discrepancy between the EPA’s fuel economy estimates for hybrid-powered cars and their real world mileage, test procedures have been refined again.

For ’08 model vehicles, the EPA numbers will provide “in use” figures based on a combination of the old tests and new tests. The new procedures will incorporate faster speeds (up to 80mph), greater acceleration (up to eight mph per second), warmer outside operating temperature (including air conditioner use) and colder outside operating temperatures (including heater and defroster use).

The industry fully (and rightly) expects the new testing procedures to lower EPA “in use” mileage estimates even further, especially for hybrid drive cars like the Toyota Prius that benefit from “gentle driving” in the city cycle. Meanwhile, we can still glean some interesting information from the EPA stats.

Although it’s not well known, the EPA keeps two sets of books for public perusal. Pistonheads can scan both the government’s official EPA numbers for all cars certified for the U.S. and the raw test results. But wait; there’s more! The EPA also provides a given model’s engine displacement, engine revs in top gear, inertia weight (test weight for the EPA test) and dynamometer resistance settings.

University of Michigan physics Professor Marc Ross has developed formulas that can crunch the EPA’s dynamometer resistance readings to compute the amount of drag in pounds for speeds between 45 and 55 mph. Working with his equations, a math-minded motorist can predict a vehicle’s EPA gas mileage under a variety of test and non-test conditions. 

For example, the 2007 Avalon has inertia weight of 3875 lbs. At 50 mph, with its 3.5-liter engine turning at 1555 rpm, the Avalon generates 91 pounds of drag. Bottom line: the Avalon achieves 39.6 mpg on the HWFET test– as compared to 31 mpg on the window sticker.

The 2007 Five Hundred has a 4000 lbs. inertia weight. At 50 mph, with its 3.0-liter engine turning at 1520 RPM, the soon-to-be Taurus generates 105 pounds of drag. Bottom line: 37 mpg on the HWFET test– as compared to 29 mpg on the EPA window sticker.

Theoretically, the Five Hundred achieves 35.3 mpg at 55 mph, 30.4 mpg at 65 mph, and 22.6 mpg at 85 mph. The Avalon gets 36.2 mpg at 55 mph, 32.1 mpg at 65 mph, and 24.8 mpg at 85 mph.

The Avalon’s lower-profile aerodynamic shape and bigger engine make it more frugal than the Five Hundred. (Five Hundred owners pay a price for Ford’s decision to make the Volvo-based model tall and boxy to attract SUV buyers.) With its smaller engine, the Five Hundred is also slower than the Avalon– which has been slated for not being fast off the line. Both vehicles have tall gearing to aid fuel economy.

Toyota doesn’t use pixie dust or a magic carburetor to get better mileage than the Five Hundred. Toyota achieves better fuel efficiency because of the choices its creators made between looks, room, fuel economy, acceleration and drivability.

With revised EPA testing procedures leading to lowered fuel economy figures, with revised CAFE legislation mandating higher required fleet fuel efficiency averages, the pressure is on for automakers to produce more– and more popular– higher mileage vehicles. Only there’s a loophole.

According to the official EPA website, their new “in use” stats will “not affect the CAFE calculation for purposes of determining manufacturers’ compliance with the CAFE standard.” In other words, the new CAFE averages will continue to be based on the old EPA tests. Well how about that?

So here we are, trying to convince American motorists to abandon their SUV’s for smaller, more fuel-efficient vehicles, to do their bit to reduce global warming and eliminate the need for messy military entanglements. And along comes a scientific study from a reputable independent organization that concludes that you’re safer in an SUV than a passenger car. Nuts.

You remember that debate, don’t you? Back before carbon dioxide was a planet killer, before hurricane Katrina sent the price of gas soaring, before the Iraq war got old, the anti-SUV crowd focused their attention on safety. They highlighted the “us vs. them” SUV vs. car death match, where the guy with the morally indefensible vehicle won the right to play again. Which was unfair but true. And still is.   

Last Thursday, the Insurance Institute for Highway Safety (IIHS) released the results of a study examining death rates for drivers of 2001 to 2004 model year vehicles involved in crashes from 2002 through 2005. The results were rated by deaths per million vehicle years (DMVY).

The IIHS’ separated the vehicles into eight categories: cars, sports, luxury, specialty, station wagons, minivans, SUV’s and pickup trucks. The “deaths by body style” stats were conclusive. According to the report, large and mid-sized 4WD vehicles (47 and 59 DMVY) are safer than cars classified as mini (148), small (103), midsize (71), large (81) and very large (61).

The IIHS report also listed the vehicles with the highest and lowest driver death rates. Of the 16 “worst” vehicles rated, cars occupied 12 slots, while SUV’s garnered four places on the list (a 75 / 25 percent split). Of the 15 “best” vehicles, five cars (33 percent), seven SUV’s (47 percent) and three minivans (20 percent) made the grade. 

That said, the IIHS study rated both small and very large SUV’s appreciably more deadly than mid-sized and large SUV’s. And there are as many ways to spin interpret the IIHS data as there are media outlets happy to avoid the logical, distinctly non-PC headline “SUV’s Safer than Cars.”

CBS News compared the "death rates in passenger vehicles with similar weight" and came to a different conclusion: "Cars Still Beat SUV's In Safety." The Detroit News report avoided any SUV vs. car comparisons. Reuters touted the Ford F-150’s huge safety gains. Consumer Reports focused on the importance of driver behavior, rather than vehicle design: 

“Care should be taken when evaluating this data because there are driver factors (such as demographics and region) that might greatly affect the fatality rates per model. We believe models that appeal to a more careful driver tend to have a lower fatality rate than those that attract a more risk-prone driver.”

While it's easy to understand how the Nissan 350Z made it on the IIHS black list, it’s hard to think of Kia drivers (Spectra fourth, Rio sixth) as “thrill seekers.” No, the simple, unavoidable, inconvenient truth is that both the pro and anti-SUV campaigners were right: physics rule the day.

Corroboration comes via the National Highway Traffic Safety Administration’s (NHSTA) 2005 crash stats. Measuring driver fatalities in all types of crashes, SUV's were 5.2 percent safer than passenger cars. And it’s no fluke. In 2003, SUV’s out-protected cars by 5.3 percent. In 2004, the figure climbed to 6.1 percent. In 2005, it rose to 6.6 percent.

Again, there are many ways to interpret the data. If you measure non-driver fatalities, or rollover crashes, the picture changes. But there’s plenty of evidence to confirm what common sense suggests. In 2005, SUV occupants were twice as safe as passenger car occupants in front, side and rear crashes. 

The safety gap is bound to widen. Thanks to rising gas prices and changing consumer tastes, inherently dangerous jumbo-sized SUV’s are either history (e.g. Ford Excursion) or fading fast (e.g. Chevrolet TrailBlazer). Buyers of full-sized SUV’s are migrating towards smaller, lower riding and safer car-based SUV’s (a.k.a. CUV’s). And NHTSA legislation mandating electronic stability control in all SUV’s will yield significant safety gains. 

None of this is good news for environmental campaigners, most of whom favor government intervention to “persuade” Americans drivers to exchange their SUV’s for small, frugal and more dangerous vehicles. Still, one should never underestimate the zealot’s power to surmount scientific results. If SUV’s were outlawed, there wouldn’t BE a safety gap. More people will die from global warming than small car crashes. Etc.

To a certain extent, the pro-conservation, anti-SUV crowd has already won this debate, as witnessed by the fact that so few media outlets are willing to raise the safety vs. fuel economy issue. Well, consider it raised.

[Click here for IIHS report or here for USA Today's simplified chart.]

In an era where Explorers are MIA and Expeditions can't make it out of base camp, Ford's cute ute is a mission-critical machine. If Ford's going to Escape its financial woes, their compact SUV has to at least keep the lights on. To find out if the new Ford Escape is "the end to boredom" (as the website proclaims) or simply "the end of the line," I ran America's most popular softroader up the Adirondacks, down the interstate, into Manhattan traffic and ‘round the ‘burbs.